Auditors are Known by the Companies They Keep

Cook, Jonathan; Kowaleski, Zachary T; Minnis, Michael; Sutherland, Andrew; Zehms, Karla M.

doi:10.2139/ssrn.3326595

Cited by 10 publications

(9 citation statements)

References 65 publications

(8 reference statements)

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“…Several recent studies in finance and accounting examine misconduct in the financial advisory industry (Qureshi and Sokobin [], Griffin, Kruger, and Maturana [, ], Charoenwong, Kwan, and Umar [], McCann, Qin, and Yan [], Dimmock, Gerken, and Graham [], Cook et al. [], Egan, Matvos, and Seru [, ], Law and Zuo []). Specifically, Egan, Matvos, and Seru [] document a surprising prevalence of criminal records among financial advisors.…”

Section: Introductionmentioning

confidence: 99%

Financial Gatekeepers and Investor Protection: Evidence from Criminal Background Checks

Law

Mills

2019

J of Accounting Research

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We examine whether financial advisors with pre-advisor criminal records pose a greater risk to investors than those without. We find that financial advisors with pre-advisor criminal records are more likely to receive future customer complaints. Their complaints are more likely to receive arbitration awards or settlements and are more likely to involve large settlements exceeding $100,000. Finally, clients are more likely to suffer service disruptions from engaging advisors with pre-advisor criminal records, even incremental to the brokerage firm being high-risk. Although we do not have performance data * Nanyang Technological University; † University of Texas at Austin. Accepted by Haresh Sapra. We appreciate helpful comments of two anonymous referees,

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Section: Introductionmentioning

confidence: 99%

Financial Gatekeepers and Investor Protection: Evidence from Criminal Background Checks

Law

Mills

2019

J of Accounting Research

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“… 7. Some current working papers on auditor-client matching suggest that matching effects can partially explain audit engagement outcomes (e.g., Bills & Jensen, 2010; Cook et al, 2020; Li et al, 2018). However, the focus in our study is not on matching and selection effects in the auditor choice decision.…”

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confidence: 99%

The Relative Importance of Auditor Characteristics Versus Client Factors in Explaining Audit Quality

Cameran

Campa

Francis

2020

Journal of Accounting, Auditing & Finance

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The U.K. listed firms are used to investigate whether auditor attributes (fixed effects for audit firms, audit offices, and audit partners) add incrementally to baseline models with client controls in explaining audit quality. We document that accounting firm fixed effects add significantly to baseline models. To the extent an accounting firm can standardize its audits, there should be no differences across engagements. However, we find significant interoffice differences, and also significant inter-partner differences within offices. R2 analyses, hierarchical linear models, LASSO (least absolute shrinkage and selection operator) regressions, and R2 decomposition analyses all show that partners are the most important auditor-related characteristic. To better understand the cause of partner variation, we test a set of partner demographic variables (in lieu of partner fixed effects), but we find that they explain little variation, once we control for firm and office differences. We conclude that partner variation is important in explaining audit quality, but understanding the causes requires going beyond existing publicly available demographic data.

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“…Location differences are important in audit quality research because interstate differences may result in differences in legal systems and legislation applicable in the country (Francis, 2004). Similarly, geographical locations may also have an impact on audit quality (Choi, Kim, Qiu, & Zang, 2012), (Cook et al, 2019) This study aims to examine and provide empirical evidence of the impact of client size and industry specialization on audit quality and the effect of audit quality on audit fees, reputation, and litigation both on audit-detecting misstatement quality and audit-reporting misstatement quality-analyzed based on client factors…”

Section: Introductionmentioning

confidence: 99%

Audit Quality Attibutes and Client Factors

Taqi

Rahmawati

Bandi

et al. 2020

AFRE

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This study aims to examine and provide empirical evidence of the impact of client size and industry specialization on audit quality and the effect of audit quality on audit fees, reputation, and litigation both on audit-detecting misstatement quality and audit-reporting misstatement quality-analyzed based on client factors. This paper utilizes the perspective regulatory theory and signaling theory and is based on quantitative-causality research conducted by the survey method. Technique sampling is performed by purposive sampling. The results indicate that client size had a significant positive effect on the audit qualitydetecting misstatement but does not have any impact on the audit quality-reporting misstatements whereas industry specialization auditors have no effect on the audit qualitydetecting misstatement but have a significant effect on the audit quality-reporting misstatements. Clients may opt for the auditor that charges lower fees but can provide a positive signal for stakeholders or choose an auditor that is registered with BPK or OJK because such audit firms are more acceptable by stakeholders. As for the external auditors, the highquality audit is necessary to avoid the risk of litigation in addition to maintaining independence.

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Auditors are Known by the Companies They Keep

Cited by 10 publications

References 65 publications

Financial Gatekeepers and Investor Protection: Evidence from Criminal Background Checks

Financial Gatekeepers and Investor Protection: Evidence from Criminal Background Checks

The Relative Importance of Auditor Characteristics Versus Client Factors in Explaining Audit Quality

Audit Quality Attibutes and Client Factors

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